Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2010, for Imagine Media, Ltd. (noting the input metadata reference to "SOBR Safe, Inc." appears to be a discrepancy, as the filing text explicitly identifies the registrant as Imagine Media, Ltd.). The company, originally formed to publish "Image Magazine," essentially abandoned its original business plan in January 2009. As of the reporting date, the company is a shell company with no active magazine operations and no office space.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2010 | Six Months Ended June 30, 2010 | Balance Sheet (June 30, 2010) |
|---|---|---|---|
| Net Sales/Revenue | $0 | $0 | - |
| Net Loss | $(10,200) | $(22,074) | - |
| Operating Expenses | $9,300 | $20,274 | - |
| Cash and Equivalents | - | - | $70 |
| Total Assets | - | - | $70 |
| Total Current Liabilities | - | - | $153,610 |
| Shareholders' Deficit | - | - | $(153,540) |
| Debt (Convertible Debenture) | - | - | $30,000 |
| Debt (Related Party Advances) | - | - | $56,390 |
Note: The company reported zero revenue for the period. Operating expenses consisted entirely of selling, general, and administrative costs, including $30,000 in stock-based compensation for directors.
Material Changes vs. Prior Period
- Revenue Decline: The company reported $0 revenue for the three and six months ended June 30, 2010, compared to $0 and $400 respectively in the prior year periods. The business has effectively ceased operations.
- Expense Reduction: Operating expenses decreased significantly to $9,300 for the quarter (from $22,895 in the prior year quarter) and $20,274 for the six months (from $39,539 in the prior year six months), reflecting the cessation of editorial and production activities.
- Loss Reduction: Net loss narrowed to $(10,200) for the quarter and $(22,074) for the six months, compared to $(23,795) and $(40,839) in the prior year periods.
- Capital Structure: The company issued 30,000 shares of common stock to directors valued at $30,000 during the period, increasing additional paid-in capital.
Outlook, Risks, and Contingencies
- Proposed Acquisition: In June 2010, the company reached a tentative agreement to acquire JAKK'D Holdings, LLC, a producer of alcoholic beverages, for 17,245,000 shares of common stock. Completion is subject to definitive agreements, due diligence, and audited financial statements of the target. There is no assurance the transaction will close.
- Trademark Dispute: A third party in California holds a registered trademark for "Image Magazine." While preliminary contacts suggest a potential license agreement, failure to resolve this could force the company to rebrand, resulting in substantial economic loss of goodwill.
- Liquidity and Debt: The company has minimal cash ($70) and significant liabilities ($153,610). It relies on advances from related parties and non-affiliates for working capital. A $30,000 convertible debenture is in default with accrued interest of $5,700.
- Operational Status: The company does not currently occupy office space and is assessing its operating strategy pending the potential acquisition.
Investor Verification Checklist
- Acquisition Viability: Verify the status of the tentative agreement with JAKK'D Holdings, LLC, including whether a definitive agreement has been signed and if due diligence is complete.
- Trademark Resolution: Confirm if a trademark license agreement with the California-based "Image Magazine" publisher has been finalized to avoid rebranding costs.
- Debt Obligations: Assess the risk of default on the $30,000 convertible debenture and related party advances, given the company's negligible cash balance.
- Going Concern: Evaluate the company's ability to continue as a going concern without the successful completion of the proposed acquisition or new capital infusion.